accredited, commercial drone user, you need to have adequate
insurance to cover not only your asset and the general operation
of your business, but your general liability for anything that you
overfly and the risks that you are taking,” said Chad Swann, a
longtime drone industry executive and founder and lead consultant
of the UAV Consulting Group.
“If you have a 55-pound UAV with a 12-foot rotor span and
fly over a venue with a lot of people, you could kill people,” he
said. “Is your insurance going to cover $20 million in lawsuits?”
Drone forerunners go all the way back to the early 1900s,
said William Mauro, director of commercial casualty product
development, a drone enthusiast and a general liability insurance
expert with Verisk Analytics, a data analytics provider serving
customers in insurance, natural resources, and financial services.
“We first began to closely look at drone technology, with an eye
on insurance, when large retailers made announcements about
possible package-delivery services using drones. We started asking ourselves if this is going to be something that we need to pay
attention to from a commercial liability insurance standpoint, or
will this technology be limited to a small number of businesses,”
Mauro said.
As drones have become more prevalent, less expensive to
purchase, and equipped with better technology—and as the
FAA has become more involved—Verisk began to see drones as
a rapidly emerging technology that’s “very accessible to a range
of potential users,” from the recreational user to the commercial
side, Mauro said. “The writing was on the wall that these were
going to be popular.”
Some in the industry wonder whether drones should be consid-
ered a type of technology that would be best insured in the aviation
liability market, or whether they would become so prevalent that
they could be considered another piece of equipment a contractor
would use on a job site. “Do you need an extra policy to cover
your exposure related to drones,” Mauro asks, “or it something
that would be covered in a standard liability policy such as a
general liability policy?”
Companies that provide insurance for drones “are a budding
industry,” Mauro said. “When we look at drones, we look at them
from the coverage angle—what is the language needed in the
policy to create the coverage product, which our actuaries can
then develop loss-costs for.”
On the recreational side, “drones have gotten to the point where
department stores can sell them for $20 or $30; anybody can pick
up a drone and start flying them. It creates a whole different type
of exposure when your 7-year-old can fly a drone in your back-
yard, while not really understanding [regulations about] what else
occupies the airspace,” Mauro said.
That can lead to “homeowners’ policy concerns,” he said, in
which an insurance policy needs to be analyzed. “When you’re
looking at it from the lens of an insurance carrier, their underwriting operations may be vastly different from the commercial
to the personal side of the business given the expected user of the
drone, such as a professional versus a hobbyist.”
Pay-As-You-Go
Boutique insurers offering pay-as-you-go insurance offerings are
becoming more popular as the FAA has made it easier to operate
drones in different areas, Swann noted. About four years ago,
“they wanted you to list every place you’re operating, but that’s
difficult,” he said. “The credible insurance companies that morphed
from general aviation insurance … know and understand that,
but there’s a gap in communication between them and the FAA,
though it’s closing.”
One insurer offering pay-as-you-go insurance, similar to
emerging types of automobile insurance, is Verifly. Jay Bregman,
the company’s CEO, said that several years ago when he was an
avid recreational drone pilot, he met several commercial drone
users who were beginning to ramp up their drone usage and
operate commercially.
These operators consistently complained about what a hassle
insurance was, Bregman said. “Part of this was because flying a
drone for money is a quintessential gig-economy profession—few
people can make a living flying drones full time, but you can have
a lot of fun doing it on the side” using drones as photographers,
contractors, or real estate surveyors.
“The idea of having an annual policy doesn’t fit their lifestyle as
well,” he added. “Also, drones are really advanced technology, and
these guys are being asked to look up and call an aviation insurance broker, and fill out an application form—that’s not the kind
of experience people would necessarily like, especially if they get
a quote for a couple of thousand dollars to insure [a few] drones.
“We thought that was really crazy,” he said, so Verifly offered
an “opportunity to produce high-quality episodic insurance technology—the idea that you can buy hourly liability insurance for
your drone, whether you’re a recreational or a commercial user.”
Verifly developed an app to allow users to punch in their name
and information, buy a policy on the spot, and get a certificate
to show or email to potential clients proving they have a valid
drone insurance policy.
This provides a business advantage, as uninsured operators “are
losing business because they’re uninsured,” Bregman said. “They’ll
go up to certain real estate brokers, or construction companies,
who basically say, ‘I’ll give you the job—but I need to see [that
you have] $1 million in insurance.’”
The commercial use case is driven by requirements of clients, who
treat drone operators as they would any other business-to-business
“It creates a whole di;erent type
of exposure when your 7-year-old
can fly a drone in your backyard,
while not really understanding
[regulations about] what else
occupies the airspace.”
